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GM goes under. gonna get bought the govmt
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Majawala



Joined: 14 Oct 2005
Posts: 1806
GM goes under. gonna get bought the govmt  Reply with quote  

http://www.reuters.com/article/mergersNews/idUSN1943363120090519

In addition, the government would extend a credit line to the new company and forgive the bulk of the $15.4 billion in emergency loans that the U.S. has already provided to GM, the source said.

wtf? how did they waste 15 billion in a couple months?
Post Wed May 20, 2009 5:30 am
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futuristxen



Joined: 01 Jul 2002
Posts: 19356
Location: Tighten Your Bible Belt
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Good. Now let's take over some banks.
Post Wed May 20, 2009 6:30 am
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redball



Joined: 12 May 2006
Posts: 6870
Location: Northern New Jersey
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Let me know when GM goes under, because it hasn't yet. Also, I'd be interested in what the government will do in that situation, assuming it will arise.
Post Wed May 20, 2009 6:37 am
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Captiv8



Joined: 25 Aug 2006
Posts: 8423
Location: Third Coast
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This is bad news for a lot of people nationwide, and Michigan as a whole. My girlfriend's parents are both employed by GM in one way or another, and one of them for sure has to look for another job come July. My dad worked 30 years for GM and has had to take pension and healthcare cuts for several years now. Thank God I got out of the auto industry game when I did. In a way this is good as it will hopefully allow for more careful restructuring, but I can't help but feel for all the people that are out of work.
Post Wed May 20, 2009 7:38 am
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A.Steele



Joined: 05 Nov 2008
Posts: 149
Location: northeast mpls
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Obama better name a model after himself. when in rome........
Post Wed May 20, 2009 7:50 am
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C.R.A.Z.Y



Joined: 18 Feb 2008
Posts: 2719
Location: Vote for me and i'll vote for you.
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great. buy some shit that aint worth nothing. while they are at it they might as well send out some more 350 dollar checks to stimulate your prostate. pretty soon well all be wearing drab sweaters and eating cabbage soup.
Post Wed May 20, 2009 8:23 am
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mzehe916



Joined: 04 Aug 2006
Posts: 4542
Location: Switzerland
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Is it safe to say that the workers union killed GM? Or the auto industry as a whole in the U.S.? I've talked to guys in a non-union shop and they cite the collapse of the U.S. auto industry on why unions can suck. I've only worked for one union and I don't hate it at all. So, this isn't a reproach, just a question.
Post Wed May 20, 2009 8:40 am
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redball



Joined: 12 May 2006
Posts: 6870
Location: Northern New Jersey
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http://www.fivethirtyeight.com/2009/03/gms-problems-are-50-years-in-making.html


Quote:

GM's Problems are 50 Years in the Making
from FiveThirtyEight.com: Electoral Projections Done Right by Nate Silver

Let's take something of a 30,000-foot view on the condition of General Motors. The chart below details GM's operating margin -- its profits divided into its revenues -- over the past 50 years:



I haven't provided the dates on the chart because they aren't important. The auto business is highly cyclical because consumers are buying expensive assets that last for years at a time. Nobody ever really has to buy a new car (they can buy a used one if their car breaks down), and therefore consumers are willing to hold on to their existing vehicles and wait out economic slumps. You can't do that with, say, a loaf of bread, or even something like a cellphone, which has a much shorter lifespan.

But you knew all of that already. The remarkable thing is that, once you account for the economic cycles, the trend for GM is exceptionally steady -- an exceptionally steady trend downward. There were still bad times thirty years ago -- but they weren't bad enough to threaten GM's survival, and conversely, the good times were much better. These are General Motors' operating margins by decade:
Average Annual Operating Margin, General Motors
1960s: 8.7%
1970s: 5.5%
1980s: 3.0%
1990s: 1.3%*
2000s: -0.5%
* Excludes one-time $20 billion accounting charge for retiree health benefits in 1992.
If I were an alien beaming down from Rigel-3 looking at this pattern -- an alien with an MBA degree -- my first guess is that it would reflect some sort of systemic problem, some chronic imbalance that magnified over time. Something, in other words, like the costs of GM's retiree pension and health care programs. It's difficult to get a precise figure on these so-called legacy costs, but they averaged about $7 billion per year between 1993 and 2007 and are probably at least $10 billion per year now. Considering that GM has never made as much as $10 billion in profit in a year and that its entire operating lossses in 2008 were $13.8 billion, you can see why this is a significant problem.

Of course, GM benefited by promising its employees access to lucrative retirement programs -- it benefited by being able to pay less to those employees in the form of salary. But whereas the benefits to GM came long ago, the costs come now. This, indeed, is the entire crux of the problem, as is cogently explained by this Washington Post article from 2005:
GM began its slide down the slippery slope in 1950, when it began picking up costs for medical insurance, pensions and retiree benefits. There was huge risk to GM in taking on these obligations -- but that didn't show up as a cost or balance-sheet liability. By 1973, the UAW says, GM was paying the entire health insurance bill for its employees, survivors and retirees, and had agreed to "30 and out" early retirement that granted workers full pensions after 30 years on the job, regardless of age.

These problems began to surface about 15 years ago because regulators changed the accounting rules. In 1992, GM says, it took a $20 billion non-cash charge to recognize pension obligations. Evolving rules then put OPEB on the balance sheet. Now, these obligations -- call it a combined $170 billion for U.S. operations -- are fully visible. And out-of-pocket costs for health care are eating GM alive.

GM was willing to cut its employees some very attractive deals in the 1950s through the 1980s -- provided that they took them in the form of retirement benefits rather than salary, which wouldn't hit GM's books until much later and which until 1992 weren't even required to be carried on its balance sheets all, making its financial statements (superficially) more appealing to its shareholders. That health care costs have risen so substantially in the United States have made a bad matter worse.

This issue is wrongly portrayed by both the liberal and the conservative media as one of management versus labor, when really it is a battle between General Motors past and General Motors present. In the 50s, 60s and 70s, everyone benefited: GM and its shareholders got the benefit of higher profit margins, and meanwhile, its employees benefited from GM's willingness to cut a bad deal -- for every dollar they were giving up in salary, those employees were getting a dollar and change back in retirement benefits. But now, everyone is hurting.

Nor does this provide for much in the way of solutions. The retirees might have benefited from GM's short-sightedness -- but they also worked hard Monday through Friday every week of in expectation of receiving the benefits that GM had promised them. From the standpoint of fairness, it would be much better to require GM to take the hit -- but there isn't much of GM left to punish, as its outstanding retiree obligations exceed its market capitalization many times over, and as the decision-makers who led GM into this position left the company decades ago. Today's employees at GM, and the unions that organize them, likewise don't have anything much to do with the problem -- most of the excess costs it requires to produce a Buick versus a Toyota come in the form of legacy costs, not what those employees are receiving in salary and benefits today. And the taxpayer is bound to to get screwed either way, either picking up the tab to bail out GM, or bearing the costs of the pension programs, which are guaranteed by the government (although the legacy health benefits aren't guaranteed).

Policy-makers, finally, share in the blame too. General Motors might be the latest casualty of the distorted incentives created by our employer-based health care system. Meanwhile, the government would probably improve incentives by providing a more generous Social Security guarantee in lieu of guaranteeing private pension programs. The whole idea of Social Security is that people do an inadequate job of saving when left to their own devices. But companies, even companies as big and proud as General Motors, are overly concerned with the present as well.
Post Wed May 20, 2009 8:51 am
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Jesse



Joined: 02 Jul 2002
Posts: 6166
Location: privileged homeless
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mzehe916 wrote:
Is it safe to say that the workers union killed GM? Or the auto industry as a whole in the U.S.? I've talked to guys in a non-union shop and they cite the collapse of the U.S. auto industry on why unions can suck. I've only worked for one union and I don't hate it at all. So, this isn't a reproach, just a question.
I guess a non-union auto industry could degrade employee safety and recompense and pensions and all kinds of shit until it was essentially a sweatshop and then survive on the backs of the exploited workers. I don't see that as preferable to a collapse, though.

Unions are why there is such a thing as a weekend. Let us not take unions for granted!
Post Wed May 20, 2009 9:37 am
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redball



Joined: 12 May 2006
Posts: 6870
Location: Northern New Jersey
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Except the UAW, much more than the IUE, is complicit in what happened. Unions are a force for good, until they become a force for bad. One should not assume that because the UAW was once a decent organization that it still is. It isn't.

In this case the union managed to obtain a contract that was not sustainable. Then when leadership in GM came back to point out that this flaw and the likely result the union would not budge. Now we're at that result, which industry insiders have known about for years, and both parties are crying foul. They had almost three decades to fix this and they did almost nothing until a few years ago. By then it was already too late.

The best thing that could happen right now is for GM to be split into smaller companies with a logical set of brands. There's already plans for Fiat to purchase two of the European divisions, Opel and Saab, which it may then merge with parts of Chrysler. Buick seems sustainable so long as there is a middle class in China. Saturn may be salvageable if the dealerships step up, otherwise it's toast. GMC has outlived its usefulness, either kill Chevy trucks or kill GMC, or maybe give the two divisions to different companies.. Among other things, this would increase competition and create some artificial inefficiency (inefficiency = jobs).

The government would take control of the pensions and the new companies wouldn't worry about them. The health care could be rolled into public employees' health care, which would be much more efficient than the old system. With our economy in reset mode right now people can afford to work at lower wages, so everything would be much more sustainable.
Post Wed May 20, 2009 10:03 am
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mzehe916



Joined: 04 Aug 2006
Posts: 4542
Location: Switzerland
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Jesse wrote:
mzehe916 wrote:
Is it safe to say that the workers union killed GM? Or the auto industry as a whole in the U.S.? I've talked to guys in a non-union shop and they cite the collapse of the U.S. auto industry on why unions can suck. I've only worked for one union and I don't hate it at all. So, this isn't a reproach, just a question.
I guess a non-union auto industry could degrade employee safety and recompense and pensions and all kinds of shit until it was essentially a sweatshop and then survive on the backs of the exploited workers. I don't see that as preferable to a collapse, though.

Unions are why there is such a thing as a weekend. Let us not take unions for granted!


You say "could," but that doesn't mean it would. I worked for a large grocery chain that didn't have a union and we had health benefits, paid vacation, and other small perks. I understand how corruption works. I just don't fill the void with corruption when the chance arrives. The pensions of the UAW are out of control.

Imagine a guy working in an auto factory when he is 18. Retires after 20 years at age 38. His salary is paid for the rest of his life. I blame a selfish union on one side, and shapeshifting financial books on the other side.
Post Wed May 20, 2009 10:07 am
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Embryo



Joined: 31 Dec 2002
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yeah at least the way nate tells it, it doesn't sound like unions were at fault at all -- it was a side effect of how GM handled a competitive market for employers in the auto industry.

bad look for everyone.
Post Wed May 20, 2009 10:10 am
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redball



Joined: 12 May 2006
Posts: 6870
Location: Northern New Jersey
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Nate's take is a corollary to the standard "blame the union" mantra that you hear. The unions were complicit. GM tried for decades to renegotiate and change the contracts, especially for the last two decades. The stories of janitors making $30/hr really were true.

When left with no other choice, they pushed NAFTA through. It was a huge union busting effort, to bust a union that continued to be unreasonable. It hurt everyone and paved the way for foreign manufacturers to come into the states and severely undercut what UAW-bound American manufacturers were bound to. Then the UAW finally started to let up but it was too little too late.

We can't excuse any party in this. If we excuse the unions for pushing unsustainable contracts then we tell them to do it again. If we excuse the auto manufacturers for playing loose with their future then we encourage the same practices that caused this (and the financial meltdown to some extent). If we excuse the government then we'll never see a change in how our trade agreements are enacted. Lastly, we can't excuse ourselves for turning a durable good into a disposable one because our unsustainable consumerism is at the forefront here.
Post Wed May 20, 2009 10:24 am
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Dr Sagacious



Joined: 01 Mar 2009
Posts: 1843
Location: Redford
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Jesse wrote:
mzehe916 wrote:
Is it safe to say that the workers union killed GM? Or the auto industry as a whole in the U.S.? I've talked to guys in a non-union shop and they cite the collapse of the U.S. auto industry on why unions can suck. I've only worked for one union and I don't hate it at all. So, this isn't a reproach, just a question.
I guess a non-union auto industry could degrade employee safety and recompense and pensions and all kinds of shit until it was essentially a sweatshop and then survive on the backs of the exploited workers. I don't see that as preferable to a collapse, though.

Unions are why there is such a thing as a weekend. Let us not take unions for granted!


Perhaps you don't know much about the UAW? Some of the laziest douches in the world, and the most corrupt. I am in no way saying that everyone in the UAW is a piece of trash. But there are a lot of blemishes.

Also, GM started collapsing when they decided ten years ago that they would do nothing to prepare for this. Everyone in the industry saw this coming, and if you didn't you probably worked for one of the big three. Every one of the Big 3 decided not to shrink their product line. They decided against building a gas-mileage-friendly car. Do we really need two Ford Explorers, one with the Mercury tag on it? Do we really need two Silverado's, one with GMC on it? No.

And the reason Michigan is doing so bad, is because they put all their eggs into one basket. And the basket fell off the Renaissance Center.
Post Wed May 20, 2009 11:18 am
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Dan Shay



Joined: 30 Aug 2003
Posts: 11242
Location: MN
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American automakers alone aren't to blame.

Alone they'd never be able to invest the massive amounts on infrastructure it would take to upgrade the steel foundries, many of which haven't been since pre WWI.

Asia collectivized and did this but the government's subsodizing of the industry was one of those "doesn't pay off until a half century from now" investments. The US is way too shortsighted for that. If we weren't shortsighted we wouldn't be putting everything into cars as transportation and zoning so people live an hour away from work.

Consumers demand for products so cheap they don't last isn't industries fault alone either.

We should demand cars with the durability of AK47s and the part standardization and ease of field repair of the VW beetle.
Post Wed May 20, 2009 11:33 am
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